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Gold and silver volatility rises: physical buyers should focus on cost of ownership

2026-09-18 09:47:44 | 浏览 1

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Gold and silver prices have become more volatile recently, with market attention often focused on "how much it rose or fell today". However, for buyers of physical gold bars, coins and silver bars, daily price movements are not the sole — or even the most important — determinant of actual returns.

The more critical question is: what is the total cost of ownership for different products? How do these costs accumulate over time?


1. Why is "cost of ownership rate" more important than "daily price changes"?

  • Consider two investors buying gold at the same time:
  • Investor A chooses a low-premium product with a narrow buy-sell spread and low custody fees, planning to hold for 5 years;
  • Investor B chooses a high-premium product with a wider spread and higher custody fees, planning to hold for 1 year.

Even facing the same gold price trajectory, their final returns may differ significantly due to different cost structures.

The core idea of cost of ownership rate is to allocate one-time costs (such as premiums and spreads) and ongoing costs (such as custody fees) over the holding period, calculating the average annual cost percentage.


2. How to simply calculate cost of ownership rate?

A simplified calculation framework:

Total Cost of Ownership = Product Premium + Buy-Sell Spread + (Custody Fee × Holding Years) + Other Fees

Annualised Cost of Ownership Rate = Total Cost of Ownership ÷ Total Purchase Amount ÷ Holding Years


Illustrative example (hypothetical figures):

  • Product A: 3% premium, 2% spread, 0.5% annual custody fee, 5-year holding

Total Cost = 3% + 2% + (0.5% × 5) = 7.5%

Annualised Rate = 7.5% ÷ 5 = 1.5%/year

  • Product B: 5% premium, 4% spread, 1% annual custody fee, 2-year holding

Total Cost = 5% + 4% + (1% × 2) = 11%

Annualised Rate = 11% ÷ 2 = 5.5%/year

Even with identical gold price performance, Product B's higher cost structure would significantly erode actual returns.


3. Implications for providers of physical gold and silver products

For providers of gold bars, coins and silver bars, the current environment supports:

1. Transparent cost structures

  • Clearly disclose product premiums, buy-sell spreads, custody fees and other charges;
  • Provide simple calculation tools or examples to help clients understand total costs.

2. Diversified product offerings

  • Offer products with different premium and fee combinations for short-term and long-term holders;
  • Help clients balance cost efficiency with flexibility.

3. Education-led communication

  • Guide clients from "looking only at price" toward "comparing costs";
  • Explain why lower-cost products may offer advantages over longer holding periods.

4. Neutral guidance for investors

For investors, a neutral thinking framework is:

When comparing two products, am I looking at daily prices, or calculating total cost of ownership?

A more balanced approach is to:

  • Ask suppliers for complete pricing structures, including premiums, spreads and custody fees;
  • Calculate the annualised cost of ownership rate based on your intended holding period;
  • Choose products on a transparent, comparable cost basis that align with your needs.

Price volatility cannot be controlled, but costs can be chosen.


Upway Global: Driving New Patterns in Gold Investment

Upway Global, a prominent brand under Upway Group, has been rooted in the market for over 16 years, holding Grade AA member status (No. 084) at the HKGX and serving as a core member of Bullion Group. As a key player in the precious metals investment sector, Upway Global strictly follows international purity and quality standards, earning the prestigious "Recognised Delivery Bar Refiner Certificate," ranking among Hong Kong's top refiners. The brand focuses on offering diverse electronic trading in precious metals, its outstanding market performance includes a single-day XAU turnover reaching USD 80.75 billion in 2025, with over 2.1 million active members and over 7.6 billion cumulative orders, maintaining the highest average monthly trading volume at the HKGX.

At the same time, Upway Global recognises that user experience is central to brand competitiveness. Our platform offers 24/7 multilingual customer support, with dedicated service specialists assisting clients around the clock. Standing side by side with investors in a rapidly changing market, Upway Global helps clients achieve steady asset growth through reliable and professional services.


Risk Disclosure

This report is based on publicly available information and mainstream media coverage. Policies and data may change upon release of official documents or judicial rulings. Precious metal prices are affected by USD dynamics, interest rates, geopolitics, and central bank demand, among other factors, and are subject to significant volatility. Any investment views herein are for reference only and do not constitute investment or trading advice for any individual. Please assess decisions prudently considering your own risk tolerance and financial conditions.